I’m not expecting this to be hugely lengthy and I am living on the edge by having no plan or anything, but hopefully I can stitch something together that is just about readable and might even make a smidgeon of sense.
Whilst creating that ‘Educational’ Blog about Consistency & Volatility the other day (scroll down on the Educational Blogs page and you should find it very quickly), I realised that after 7 years or something of bandying around the term ‘Quality Stocks’ I had never actually made any attempt to try to define that, and this Blog is obviously an attempt to fill the gap (is ‘bandying’ an actual word? The Spellcheck seems happy with it anyway……perhaps it is something to do with Groupies……)
I am sure I have mentioned a few times before how I really struggle with this idea of ‘Growth Stocks’ and ‘Value Stocks’ and my whole beef is really around the idea that a Growth Stock doesn’t need to encompass the concept of Value and that Value Stocks really seems to be lazily used to describe Stocks with a large Dividend Yield. Of course the idea that all Stocks with chunky Yields represent value is silly because they could just as easily be flagging a big problem and actually be a ‘Value Trap’.
‘Value Trap, utter Cr*p.’
I was thinking that had a bit of a rhyme to it and then I remembered a joke from the comedian Tony Hawks (he’s on Radio 4 a bit but most people probably won’t know him – apart from the book ‘Round Ireland with a Fridge’ which is very good), where he talks about when he had a minor hit record as ‘Morris Major & the Minors’ probably in the late 1980s and it was called ‘Stutter Rap’. Anyway, he was on about reviews it had got and some wag in a Music Paper of the time had the written the headline; ‘Stutter Rap, Utter Cr*p’.
The inspiration for bashing out this WheelieBlog came whilst I was reading an excellent article written by Philip Ryland in the Investors Chronicle from 16th August 2019 (the one with the Chameleon/Lizard thing on the cover) entitled ‘Debt by any other Name’ and starting on page 33.
If you have access to the magazine in whichever format, I suggest you have a good read of it and perhaps it is best to read my (hopefully simple) blog first and I also suggest reading these excellent Guest Blogs by Justin Scarborough which are particularly useful if you need to brush up on basic understanding of Accounts (this is to Part 2 and there is a link inside it at the top to Part 1):
A few months ago I produced a series of Checklists to be used when Buying particular kinds of Stocks and then some while later it hit me that I ought to produce one for those very high risk, often loss-making, start-up type businesses on AIM that I avoid on the whole but occasionally I will buy into one. Before getting stuck into this particular one, here are Links to the other ones I produced – in fact this is the final one but it has Links to the others:
This Guest Blog has been kindly sent to me in order for Readers to see what Journal.Investments are providing in terms of a Website through which you can record information about particular Stocks in a structured way with various ways to analyse your performance and it is FREE to use. I first became aware of this perhaps a year ago and I have had various chats with the guys who run it with regards to how it can be shared with the wider community. It is now ready so feel free to take advantage. Having proof-read the text they sent me I have to say that it does sound a very useful tool.
I have no commercial relationship with Journal.Investments.
PS. You can find a copy of ‘The Art of Execution’ in Wheelie’s Bookshop if you are desperate to spend money.
This is a Guest Blog sent to me by Zoe Talent Solutions which discusses various aspects of HR management courses and skills. Also at the bottom they have provided me with an Infographic which has some useful information on it. You can get a Zoe Talent Solutions Human Resource Training Course here.
Please note I have no commercial relationship with Zoe Talent Solutions but I thought some WD Readers might be interested.
If you have not had the dubious pleasure of the first 2 bits of this Blog Series, then you should be able to locate them at the following Links:
This final Part of the Blogs is a bit different as it postulates (is that a word?) a technique for analysing a Stock and then has an example to show it in action.
When reading any News item and in particular when looking through Results on Recovery Situations, a great way to understand the true relevance of the information is to separate bits that are Historic from bits that will impact in the Future. To a large extent I do this in my head in the Mornings when working through the RNS Statements and this is easier to do on Stocks which I know extremely well because I have held them a while and the changes in the Business leap out at me. The logic being that bits that are in the past are irrelevant really (ok, they do give some context but 9 times out of 10 they are unlikely to be repeated), and it is things that are likely to impact in the Future that really should be concerning us and getting our attention. I think this is a huge mistake a lot of People make - it is so easy to focus on past problems and totally overlook a significant change that is happening within the Business. I know this because I make this cognitive error all the time myself.
If you have not had the dubious pleasure of reading the first part of this Blog Series, then you should be able to locate it at the following Link:
Debt and Cash are arguably the most important Numbers you can find in the Headlines - and you would be amazed how often the Debt Number is conveniently not included. I have even had Results Statements in recent Days where I have found no mention of the Debt level in the first few bits of the Results Update and I have had to scroll and scroll and scroll right down to the actual ‘Financial Review’ bit to find any mention of Debt - and of course you can be 100% certain that if I have had to do this then the Debt Mountain is chunky and the Debt has probably increased (if the Debt had improved, you can guarantee they would be bragging about it up front !!).
If you follow me on the Tweet Machine you have probably noticed by now that every morning from just after 8am I am looking through the RNS News Feed for the Day (which I usually find on Investegate or if that is playing up I go to the LSE RNS Feed), and first off I am looking for Stocks I hold and any News they have put out.
Before this I usually grab my Mobile Fone where I use the ADVFN App and even bang on 8am there are movements on some of my Stocks and if I know one of them is due to put out a Trading Statement or a Results Statement, then I use the App to have a quick look at the Headlines or perhaps the full Statement if it is just a quick Trading Update. The ADVFN App is superb and an easy way to track your Stocks and you can set up Watchlists and all that for Stocks you don’t hold and of course it works on Tablets and stuff. I also use it to see what the Indexes are doing but unfortunately there is a 15 minute delay on the FREE version but I do find that the Intraday Charts it shows do seem to be pretty near Real-time.
Earlier this afternoon I was reading a copy of Investors Chronicle from a few Weeks ago (as always I am way out of date on my reading !!) and there was a couple of pages on a Regular Feature that Chris Dillow writes regarding several different Investment Strategies and how they work over time (Editor’s note - this Blog was first written in draft form back in mid 2018).
I reckon I might have done a Blog around this before or at least I have probably referred to what Chris does in this Strategy Piece and I guess that is one of the catches of having written various Blogs for nearly 4 Years now - I totally forget what I have written about and what I haven’t !!
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